Real Estate Appraisals 101

One very important step in almost every real estate transaction is an appraisal on the property.  Why is it so important?  A lender will order an appraisal before approving a loan on the property.  An appraisal could come back thousands less-or more-than the agreed upon purchase price in the contract.  So it's very important to know what an appraiser is looking for and takes into account in preparing an appraisal.  I found this helpful video and article on AOL Real Estate to get you started. Take a look… if you have questions, don’t hesitate to contact me.

by AOL Real EstateToday we hear more and more about appraisals as part of the real estate process. Tough markets, like the one in which we find ourselves today, bring the subject to the forefront more so than in times of booming sales and bidding wars.
 
In fact, these days, more often than not appraisals can be one of the biggest roadblocks to a successful purchase – or sale – of a home. Why is that? What makes an appraisal so critical? And while we're at it, just exactly goes into an appraisal?

Simply put, an appraisal is an informed estimate of the value of a property. It's the number lenders refer to when deciding whether, or not to approve loans. It could be said that appraisals are meant to help buyers and lenders avoid potentially bad investments. Here's what you should know about how it works.

The seller of a home will probably have a real estate agent, who will use a CMA, or comparative market analysis, to determine a realistic asking price for the home. While the information is useful, the lender will look to a specialized, local third-party professional to provide the "official" home valuation report. And that professional is... you guessed it ...the appraiser.

You see, arriving at that final appraisal figure is no easy task -- to be accurate, an appraiser needs an educated, trained perspective and understanding of all of factors that have to be carefully weighed with respect to the state of the real estate market in that specific area.

For example, major factors of the appraisal have more to do with the neighborhood than the home itself:

The type of area: Is it part of a development? Or is it stand alone acreage?
The recent sales prices of comparable homes located nearby
The average sales time of this type of property in that area
The proximity to desirable schools and public facilities

This information can be found by various sources -- from driving down the street and observing the surroundings, to gathering information at the local tax assessor's office and county courthouses, through MLSs (multiple listing services), by conducting interviews and more.

It's a lot to consider, so you can see how having experience valuating properties within a given neighborhood is critical to arriving at an accurate appraisal.

But what about the property itself?

The appraiser will tour the home as a potential buyer would tour the home. Clean, updated, well-maintained homes will appeal more to buyers – and chances are, they'll appeal more to the appraiser as well.

First impressions aside, for his analysis the appraiser will generally consider only permanent fixtures and real property -- that is, property that's permanently dug into, or set upon, land. So, a building is real property -- a couch is not. Added touches, like sconces or other added fixtures, are nice but do not count toward the appraiser's assessment.

After taking stock of the real property, the appraiser estimates the square footage of the home. Typically, the more space in a home, the better. GLA, or gross living area, is calculated by measuring the exterior of the home. The appraiser will note the GLA and then will look to calculate actual living area space. So that means he deducts the measurements of non-living areas, such as garages or covered porches. (Although, surprisingly, finished basements are calculated separately from the above-ground GLA.)

All said and done, depending on the size of the property, an appraisal should take anywhere from 15 minutes to three hours.

But don't ask the appraiser for the value of the property while he's still there - he won't have it yet. After the walk-through, it's back to the office for some number crunching. Buyers (and lenders) can typically expect a report within a few business days.

And who pays for the appraisal? Although the Lender arranges for the Appraisal, the buyer pays the bill. For an average home, that's usually around $300 to $500.

For all your real estate needs...feel free to contact me anytime.

Oreo Cookie Turkeys...cute!!!

These turkeys are really cute and are really easy to make. I found them on a really cool blog, "The Idea Room" and pinned it on my Food Craft Board in Pinterest.  They only take about 30 minutes to make and am planning on making them with my 4 year old grandson, Blane and my two year old son, Heath.  Should be fun!

You will need the following:

Double Stuff Oreos (2 per turkey)
Small Reeses’ Peanut Butter Cups (1)
Whoppers (1)
Candy Corn
White Frosting
Black Frosting

First place your peanut butter cups in the fridge. They will cut cleaner cold. Then take an Oreo and carefully separate one of the cookies from the frosting. Gently press the pointed tips of 6 candy corns around one half of the Oreo. Take some white frosting and cover the frosting and re-attach the cookie.

Now, take the second oreo and lay it flat on the table. Pick up your Oreo with the candy corn and put some icing on the bottom of the oreo opposite from the candy corn and attach the Oreo onto the flat oreo so that it is on the back half. Prop the stuck together Oreos against a book or a wall to hold it up while the icing dries. If it does not stand up well, add some more icing.

Now take a cold peanut butter cup and cut a small section off of it so that it will have a flat side. Place some frosting on the flat section and the top of the peanut butter cup and attach it to the Oreo with the candy corn so that it becomes the body of the turkey.

Take the Whopper and put icing on the back side of it. Attach it so that it is right on top of the peanut butter cup and iced to the Oreo and Whopper. Add two drops of white icing for the eyes and a smaller drop of the black for the pupil.

For the wings, cut the very tip of a candy corn and glued a wing on both sides of the peanut butter cup. For the feet, you can use the same tip you cut off when making your wings. Let dry for about 20 minutes before handling.

I agree with the "The Idea Room", that these would be so cute to give to a friend, child or neighbor. They would also be really cute holding a name place card for your Thanksgiving Dinner. You could just put the name card behind the candy corn on the top of the turkey. So cute and easy!

Like A Breath of Fresh Air...

I wanted to share an interesting article written by Amanda Barker.  Professionally, Amanda is a designer, home stager and a life coach here in Jonesboro.  Personally, she is a wonderful woman and a great mother to two special boys, Beau and Blane.  Blane is my precious four year old grandson and is one happy, bright, and well mannered little boy.  I attribute a lot of his well being to his home environment...a relaxing, soothing and peaceful atmosphere and of course lots of love.  In the below article, Amanda writes how you can achieve a positive energy flow & over all “feel” of your space.  As stated above, I've seen the results and highly recommend her advice.  Enjoy...

Living Free with Feng Shui
by Amanda Barker

For a long time I have resisted teaching & sharing Feng Shui for the worry that some people would see it as just plain weird. Having practiced it fervently for the past two years I can no longer keep quiet. It has been a life changing experience & one worth sharing. There are depths of the teaching that I too do not fully understand quite yet. As a matter of fact, there are people that have dedicated their lives to learning it & still may not be masters. I challenge you that if you have thought “that’s just too much to learn” or “I don’t have time to read all the books”…. Don’t let that stop you. There are benefits to applying even some of the minor methods. Over a period of time I will share more & more, but just for today I’ll share a getting started point.

Like a breath of fresh air, with a little time & care you can improve the energy flow & over all “feel” of your space… I definitely recommend it for home & work, but lets start with home. What your eyes take in the moment you awake or walk in your door sets the tone for your inner peace or lack thereof. Of course, I’m not referring to a spiritual peace, that can only come from God. I am referring to the internal stress or aggravation we feel when things are out of order. If you do not feel that, then you may have gotten use to it & I would be willing to bet that your surroundings are chaos. In this case people are blocking the feeling & that is an even deeper issue.

Lets begin with clutter. Never underestimate the effect of clutter on your life. Whenever I meet people that need my help in decor & they tell me they are “stuck” & just don’t know where to begin, they are usually inendated with clutter. Where clutter accumulates, energy stagnates. If you are wanting to go on the journey to a more peaceful, more serene you, then I urge you to begin clearing today. In the first effort you should have an awareness of how many things you are moving & either move or discard twenty-five things. Don’t mull over each item, just getting moving with them….. Grab one… On to the next & so on! Moving energy is healthy energy. Just think what happens to a pool of still water… Soon it becomes murky & begins to smell. A lot of times people with all this “stuff” say that they can’t find the desire to begin. They constantly feel tired. No wonder you are tired. You are sitting in a box of stagnant energy. Just begin to move these things…especially the things that have no meaning & you will marvel at how light you will feel in body, mind, & spirit.

You can check out both Amanda's websites at http://www.consultamanda.com/ or http://www.designthathouse.com/

Jonesboro Makes List For Market Improvement

23 Housing Markets Show Big ImprovementDaily Real Estate News

Double the number of housing markets moved into the “improving” category this month compared to last month, according to the National Association of Home Builders/First American Improving Markets Index, which debuted last month.

Twenty-three housing markets qualified as “improving” compared to 12 last month. Metro areas are considered “improving” if they show an improvement in housing permits, employment, and housing prices for at least six months. Texas cities appear the most frequently on the list. (Arkansas and LA are 2nd).

"Both the number and geographic diversity of improving housing markets expanded this month, with Iowa, Illinois, and South Carolina all newly represented by one entry or more on the list," Bob Nielsen, NAHB chairman, said in a statement. "This is further evidence that, despite the tough conditions that persist in many cities, pockets of improvement are emerging in local housing markets across the country."

The following are the 23 markets labeled “improving” in October, according to NAHB’s index:

•Alexandria, La.

•Amarillo, Texas

•Anchorage, Alaska

•Bismarck, N.D.

•Casper, Wyo.

•Fairbanks, Ark.

•Fayetteville, N.C.

•Houma, La.

•Iowa City, Iowa

•Jonesboro, Ark.

•Kankakee, Ill.

•McAllen, Texas

•Midland, Texas

•New Orleans, La.

•Odessa, Texas

•Pine Bluff, Ark.

•Pittsburgh, Pa.

•Sherman, Texas

•Sumter, S.C.

•Waco, Texas

•Waterloo, Iowa

•Wichita Falls, Texas

•Winston-Salem, N.C.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Did you notice there are three cities in Arkansas that made the list?  Great for Arkansas!

5 Reasons To Build a New Construction Home

1.  Peace of Mind – New comes with a warranty
2.  Floor Plans – Floor plans meet today’s family needs
3.  Energy Efficient – Save on utility bills
4.  Choices – Choose your own paint, flooring, cabinet finish and upgrades
5.  Investment-  New homes tend to appreciate at a faster pace than their resale counterparts

The Realtor and The Commission

American home owners sell and move, on average, every five to seven years.  People who have lived in the same home for the past 30 years have a hard time understanding this phenomena. They are shocked that people move so often.  Yet, some people live their entire life without ever buying a home and most people who buy real estate only buy one or two homes in their entire life. I sometimes lose touch with that until I meet someone that I have to explain what a Realtor is and what a real estate agent does. Did you know that Realtor is not a job or occupation?  A Realtor is someone who belongs to the National Association of Realtors. We pay dues to belong and while membership is not mandatory it is almost impossible to sell real estate without being a member.

At times buyers will ask me how I get paid or who pays me. Some think that real estate companies pay agents. Most agents are independent contractors (self employed) that work on a 100% commission basis. Real estate agents need to work through a real estate broker and that is the purpose of a real estate company. The agent has to pay the real estate company a percentage of each commission.

It is the seller that pays us, it is called “broker reciprocity” and we get paid through the sellers broker. When an agent lists a home the seller agrees to pay a commission. Some of that commission goes to the agent the seller hires and some of it will go to a buyers agent. Either way we generally don’t need to charge a buyer directly. Commissions are not due until the home is sold and the sale closes. Agents work for free up to the closing and then we get paid.  If something happens and it fails to close, we get zero.   After closing, the check goes to the real estate brokerage and the brokers will take up to half of it and then cut the agents a check for the rest.

Home buyers and sellers often believe that real estate companies sell real estate. They really don’t and to go one step further in most cases the agent is paying for everything including the sign with the big company logo on it. It is both a good system and a bad system. 

Below is an example of what happens to a real commission when there are two agents involved and with a negotiated commission of 6%. Remember, commission is always negotiable.

Most people think real agents are overpaid, not realizing the commission is usually split four ways and all the many expenses that agents have to run their business.

Yes, it is true that selling real estate can be a rewarding and profitable buisness.  However, to be successful, one needs to have the skills to educate, counsel, sale, negotiate, market, be able work under stress, be on call 24/7 and work very long hours.  So please don't be surprised if your agent refuses to negotiate his/her commission.  Take it as a good sign that same agent will negotiate well for you too and earn, if not, pay for their professional fee...the real estate commission.

5 Surprising Credit Report Errors You Must Fix

In a recent study, 19 percent of American consumers who reported finding an error in their credit reports opted not to dispute the error, even when they were offered $5 to file the dispute! Why not? Well, some said they thought the error was too minor to impact their score, while others said the dispute process seemed too difficult to tackle.

The fact is, when you’re trying to qualify for a home loan, some of the items on your credit report that can pose a threat to your home finance plans might surprise you. Here are 5 surprising credit report entries you absolutely must fix, especially when you are in the process of buying or refinancing a home.

1. Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se. But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.

Correcting the actual balances of your outstanding bills downward to account for your recent pay-down efforts poses such a large potential improvement impact for your credit score that it might even be worth paying your mortgage professional the $30 to $50 it will cost for them to initiate a Rapid Rescore, which can update your reports to reflect your slimmed-down balances in about 72 hours, compared with the 30 to 60 days you’d expect to wait to see results from a traditional dispute or update.

2. Incorrect former addresses. Of the 19 percent of consumers who spotted an error on their report in the study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score. While an inaccurate address might not have much to do with your score, it can still wave a red flag, signaling issues that can foul-up your mortgage application.

A misspelling in an otherwise correct street name should not cause you grave concern. But if the previous addresses listed are in the wrong city or state, or otherwise come out of nowhere, they might signal that someone has used your name and/or social security number to obtain credit at a different address. Credit card fraud and identity theft are difficult to unravel when you’re not seeking credit; they are much more complicated to resolve when the credit stakes are high and the underwriter as picky as they are in the course of applying for a mortgage.

Also, current and previous addresses that conflict with where you’ve told the lender you live(d) can raise suspicion that you might be buying a second or rental home, rather than the owner-occupied home you say you’re trying to buy; that can provoke a lender to demand that you ante up more down payment dough, make you jump through greater hoops to prove your true address or even stop you from qualifying for the loan altogether.

3. Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or account in your name. If you find one of these items on one credit bureau report, but it’s currently closed or has a zero balance, you might be tempted to let it slide, thinking it can’t move the needle on your credit score. In reality, though, if someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems. Of course, if the bills weren’t paid on time or have been placed in collection, disputing the accounts’ presence on your credit report is a must.

If they were paid on time every time, though, the analysis might be different. Unfortunately, instituting a fraud-based credit freeze or fraud alert on your credit reports at the same time as you’re applying for a mortgage can complicate your own loan qualification process significantly. If you find yourself in this situation, carefully scrutinize the rest of your report and the credit reports you receive from the other bureaus to detect whether other fraudulent accounts exist, then consult with your mortgage professional on exactly when and how you should go about disputing the accounts which weren’t actually yours.

4. Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting. But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your FICO score: how much credit you have available, and how much credit you have used. So, if you have account balances that show up on your credit reports as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can skew your credit score and screw up your mortgage qualifying efforts. Big time.

5. Derogatory items that should have aged off. Very few of us are perfect, and you might have worked hard to pay your bills on time in an effort to overcome a credit ding from back in the days. Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy. If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned.

It’s not very common that credit report disputes cause dramatic changes in credit score, but again, many borrowers aren’t disputing these sorts of items they don’t realize could make a difference in their homebuying or refinancing prospect.

Beyond that, if you’re close to a credit tier cutoff, like 620-640 or 740-760, depending on your loan type, even a few points’ difference can be the difference in qualifying for a home or not, or paying a higher mortgage interest rate for the life of your loan. For these reasons, it behooves every potential borrower to be proactive in spotting and correcting these 5 must-dispute errors.

Article written by Tara-Nicholle Nelson